BC TRADING
Saved by @Alex1Powell

In this #IPO frenzy market, lets talk (Thread) about some basics around
-Angle/VC/PE
-Allotment process
-IPO Funding
-Grey Market

Hit the ‘re-tweet’ & help us educated more investors (1/n)

 Why do companies come out with an IPO?

(a) Funding needs
- Business expansion plans
- Debt payoff

(b) Non-Funding requirement
- Enhancing corporate stature
- Exit options to large investors like the VCs & PEs (2/n)
While most of us believe IPOs are for funding requirements, you deep dive and understand it’s more of an exit channel for large investors (VC/PE). Let me explain the same concept from a start-up's perspective (3/n)
If u r starting off ur entrepreneurial journey & need capital, how do u raise funds?
-Self Funding
-Friends & Relatives (F&R)
-Bank Loan
-Angel Investor
Angel investors r the 1s who invest @ the idea stage & PE/VC who invest in the growth phase of the company.(4/n)
- Self funding can be the best option but everyone’s not prepared
- F&R I wish helped
- Bank loans need collateral and
- Angel investors invest only when they see scalability in the business and hence a belief that they will get their investments back. (5/n)
Lets assume ur business idea is brilliant, Investors think this is solving a problem & hence this is worth their investments. Lets say after valuation discussions, u part away 20% equity 2 them for their investments, but, how do they make returns on the investments? (6/n)
Unlike a working partner who would take away 20% of the profits/year, Investors r in a bigger game. They don’t remove profits, they can pump cash if required 4 business 2 reaches a point of maturity where investors would like to make the best of their investments by exiting (7/n)
How would investors get exit?
-Some other big investor buys the stake at higher valuation
-Promoters buy back from the investors
-Let many investors buy from the current Investors – IPO, the easiest of all in a raging bull market & hence IPOs become a medium for exit (8/n)
Now, a lot of us have lately applied for IPOs but have not got the allotment right? How does the allotment process for retail investors work?

In case the IPO undersubscribes – all applicants will get full allotment (9/n)
In case of oversubscription,
a) First all applicants will be allotted 1 lot worth of shares each. In case, after allotting one lot each to all applicants, there are still shares available in the retail quota, those shares can be allotted proportionately (10/n)
b) On the other hand, if the applicants are so large in numbers that allotment of one lot is not possible to each of them then role of luck comes in play. Larger the oversubscription, lower the number of stocks that get allotted. (11/n)
Now think of an HNI, what option she has 2 increase her allotment size? Recent IPOs, best case would have got allotment of 1 lot of shares. There comes in the concept 4 IPO funding, financial institutions fund the application of HNIs 2 increase their allotment size (12/n)
The HNI opens a designated bank account with the Lender's/Financial Institution's preferred bank along with a demat account. HNI then issues a Power of Attorney (PoA) granting all operational rights in the favour of the Lender for both bank account and demat account.(13/n)
Depending upon the oversubscription, the lender decides the interest & margin 4m the investor. Margin is the amount the HNI has 2 bring. Generally, the interest is in the range of 8-10% & margin in the range of 0.25% to 1.5%. SBI Cards IPO was an exception where interest was 16%
Look @ the over subscription in Mazagon Dock IPO, whopping 678X & premium on listing was 49%. Due 2 such a high response 2 the IPO, the allotment vs the IPO fund amount came down significantly & this IPO required a listing premium of ~ 132% just to set-off the funding cost(15/n)
If u want 2 make money in leveraged IPO application after adjusting 4 the cost of funding then u need a fusion of reasonable oversubscription & ample listing premium. IPO funding is not as elementary as it appears to be, it eats away the major portion of listing gains.(16/n)
Suggestion - Be ready before the IPO by opening an Overdraft Account where collateral can be MF/Stocks & charge 8.5%. On the last date of subscription (provided the IPO is already decently subscribed), u can transfer funds 4m OD 2 IDFC Bank & apply 4m there under ASBA (17/n)
ASBA is Applications Supported by Blocked Amount. Money in the bank will keep earning 7% & OD will keep charging 8.5%, net differential will be 1.5%. This saving in Funding Cost will significantly bring down the required “Listing Premium to set-off funding cost”. (18/n)
Below chart calculates the return on this basis. In the same Mazagon Dock example where you made a loss of -83.86% using traditional funding route, you make a profit of 8.21% using this recommended route. (19/n)
Lets talk about the Grey market now. Grey Market for IPO is a market where deals are done in-person only among the closed trusted group of investors. These deals are usually facilitated by the broker in neighbourhood and are cash settled on the day of listing. (20/n)
In the grey market, an investor could sell buy/sell IPO shares before the company gets listed on the stock exchange as these transactions are off the market. The premium at which this deal happens with respect to the issue price of the IPO is called Grey Market Premium (21/n)
One can also sell the IPO application (irrespective of whether the allotment comes or not) for a fixed price, this rate is called Kostak Rate. (22/n)
And in case the IPO application is sold in the grey market, subject to allotment only, the deal is called 'Subject to Sauda'. In case the seller of the application doesn’t get allotment, the deal is nullified. (23/n)
To read more about the grey markets, process of an IPO, participants in an IPO and multiple other things, read our detailed blog 'A to Z of IPO' by @stepbystep888 (24/25)
Hope the thread added value :) Hit the 're-tweet' and help us reach more investors.

We have written multiple similar educative threads on personal finance. You can find them as a pinned tweet on my profile or click the link below (**END**)

https://t.co/tBHgTH0Dl4

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(Q1) Lets start with what was historically used as a method of payment?

- Barter system, you give me a cow and I give you 100 kgs of rice (2/n)

(Q2) So why dint we continue with the barter system?

- It was difficult to transact in fractions
- What if I want only 50 kgs of rice? I cant give you half a cow right?
- This is the prime reason for the introduction of smaller units of payment method we now call as coins (3/n)

(Q3) How did Gold coins get shortlisted for the job?
- It was malleable & portable
- It was non corrosive, could be stored for a long time
- It was a perfect combination of abundance & rare
- Plus it was eye catching & visually appealing (4/n)

(Q4) What about paper currencies?
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A basic primer on the Indian Paint sector

With the listing of Indigo paints, JSW entering the paint sector & now Grasim announcing to invest 5,000 cr in the sector, lets explore,
-Products
-Industry
-Company

Do hit the ‘re-tweet’ and help us educate more investors (1/n)

Lets start with PRODUCTS

India paint industry is broadly divided into two,
(1) Decorative Paints (used mainly in residential & office infrastructure)–75% of the total paints market
(2) Industrial Paints (used in Auto & other industrial uses)-25% of the total paints market (2/n)

Decorative Paints is further classified as
a. Primer & Putty–They r applied 2 the wall 2 fill the cracks in the wall & make it smooth b4 painting. It also gives a lasting effect to the paint
b. Thinner–Its mixed with the paint 2 reduce the viscosity,applying becomes easy (3/n)

c. Emulsion Paint – Water based premium range paint mainly used in metros & large cities
d. Enamel Paint- Oil based medium range paint for smaller cities
e. Distemper–Water based paint mainly for the rural area as it can be used on the wall directly without using the primer(4/n)

(f) Wood Coating – Used to protect furniture against moisture (5/n)
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Kirtan A Shah
Kirtan A Shah
@KirtanShahCFP
Does increase in Inflation & hence interest rates lead to a fall in equity? While theoretically yes, practically the last 20 years of data shows otherwise

Please ‘re-tweet’ 🧵& help us educate more retail investors

#Investing

Lets start with basic, y does inflation ⬆️?
Most feel bcoz of higher demand & lower supply but that’s nt the only factor. Imagine there is a shortage of laptops wrt the demand, but there is no liquidity in the market (people don’t have monies) will the price of laptop ⬆️? No

So, Inflation takes place because the demand supply situation is accompanied by high liquidity, people have the monies to spend and hence the price goes up. Inflation does not take place only because of the demand supply gap (3/n)

Its RBI’s job to keep inflation under check. What role does RBI play? RBI is comfortable keeping Inflation between 2-6% currently. So if Inflation is increasing, how can RBI control it? Can RBI do anything to demand & supply? Nothing (4/n)

So the only tool available with RBI to control inflation is controlling liquidity. If RBI is able to reduce liquidity in the market, less money will chase the goods and hence Inflation can be expected to stabilize. (5/n)
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Kirtan A Shah
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@KirtanShahCFP
Have been bullish on #gold since $1786, Gold at $1910 today.

#investing
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Kirtan A Shah
Kirtan A Shah
@KirtanShahCFP
After writing on Banking & Paints, this thread focuses on the 'Logistic Sector'. Idea is to give a small start to the retail investors looking at investing in this space from where they can build on.

This thread covers,
- Macro
- Business Model
- 3PL & 4PL
- Valuation (1/n)

Logistics business macro

-14% of India’s GDP is spent on Logistic
-Organized market is 42%
-Growing at 10-15%
-Employs 2.2 cr
-Achieved Infrastructure status
-FY 14-18 attracted 1,00,000 cr FDI (2/n)

What’s the business?

Logistic is traditionally seen as a warehousing & transportation business where goods, needs 2b transported 4m point A to B using Road, Rail, Ship or Air & can be stored at multiple warehouses before the consumer receives the product (3/n)

The business landscape is changing fast with newer competition and technology is challenging the older business models. 3PL (3rd party logistics) & 4PL is one such change in the business of logistics, will discuss about the same ahead. (4/n)

Listed companies involved in the business may or largely may not own the Trucks, Rails, Aircraft, Ships, Warehouses etc., but uses outsourced services of other vendors and the listed companies manage the logistics from point A to point B (5/n)
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𝐓𝐡𝐫𝐞𝐚𝐝 𝐟𝐨𝐫 𝐎𝐩𝐭𝐢𝐨𝐧𝐬
The entire thread will have some quick pointers on options trading. These bullet points are based on experience and learning and even if you are completely new,will help you to build some perspective. So,lets go :

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𝗡𝗶𝗳𝘁𝘆-𝗕𝗮𝗻𝗸𝗻𝗶𝗳𝘁𝘆 𝗢𝗽𝘁𝗶𝗼𝗻 𝗕𝘂𝘆𝗶𝗻𝗴 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆

Complete Backtest and Indicator link

🧵 A Thread 🧵

𝗦𝗲𝘁𝘂𝗽:
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🔸 Supertrend 10 , 3
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🔸 Premium nearest to 200 Rs only

[2/18]

Why Monthly Option buying ?
🔸 Less theta decay compared to weekly options
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🔸 Supertrend and MA Settings
[3/18]


🔸 Indicator Link
🔸 Click on the below 𝘭𝘪𝘯𝘬 -> 𝘈𝘥𝘥 𝘵𝘰 𝘍𝘢𝘷𝘰𝘶𝘳𝘪𝘵𝘦𝘴 -> 𝘈𝘥𝘥 𝘰𝘯 𝘊𝘩𝘢𝘳𝘵 from favourites and start using it !

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Some observations and thoughts on ZILSwap: What went well, its impact on the $ZIL ecosystem and where we need to improve with some concrete plans that are being worked on. A thread:

👇

1/ ZILSwap was launched by @SwitcheoNetwork on Oct 5, 2020 (~2 months old). Soon after, we noticed for the first time, a flurry of ZRC-2 tokens (equiv. of ERC20s on $ZIL) getting launched on the network (even though the fungible token standard had been around for a while).

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Aditya Trivedi
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@itsAdityaT
Most of the successful traders here are option sellers.

Ever wondered why?

Why we have chosen option selling?

Find our below

1: Being wrong and still making money.

We as option sellers can be wrong with our market view and still end up making money because of the power of theta decay and adjustments to some extent.

Adjustments work better as get closer to expiry since decay is the highest.

2: Theta decay

The biggest reason and one of the prime reasons is the theta decay.

Option sellers always have an advantage because the as time passes, the option premium falls even if the underlying instrument doesn't move.

3:Playing directional view

Option selling also enables us to take a directional view. In fact, directional view along with theta decay makes it a solid combination.

Debit spreads and credit spreads works great for a directional view.

4: Playing Neutral view

We can make money in option selling even if the market doesn't move as the otm options will go to 0 with the help of theta decay. It's the most fascinating thing.

This is what attracted many into option selling.
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Greg Duncan \U0001f981
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@GregDuncan_
Many traders have no consistency when sizing their positions.

The pros have this down to a science.

Here's my dead simple, 3-step guide to position sizing (and to outperforming 99% of other traders in the process):

Step 1:

Define how much of your account you're willing to risk per trade.

Personally, I never risk more than 1% of my account equity.

If I have $100,000 account, I will never risk more $1,000.

This ensures I will never blow up my account on one single trade.

There are successful traders who risk 2-3% of their account per trade, but I find it most calming to risk 1% or less.

The first step in this process is completely up to you - only you can dictate how much risk you can tolerate.

Step 2:

Look for entries & exits that are within 5% (preferably less) of each other.

This means if I buy a stock & have a 5% stop loss, I can put a 20% equity position on & still be risking 1% of my equity.

Your account will thank you w/ 20% in a stock that goes up 100%.

Step 3:

Position size using this formula:

Total equity (100%) / Trade Stop Loss %

So, if your stop loss is 4%, here's the math:

100% equity / 4% stop loss = 25% Equity Position Size

(assuming 1% equity risk).

Here's another hypothetical calculation:
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Emperor\U0001f451
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Technical Analysis Masterclass- Part 2

'Entering the trade'

Entering a trade without ascertaining a certain things is gambling.

In this masterclass we will learn the pre-requisites to enter a trade.

DON'T ENTER A TRADE WITHOUT DETERMINNG THE FOLLOWING.

Please share.

We understand what reward to risk (popularly called risk to reward) is.
It will be denoted by R:R.

We will also try to bust a few myths about R:R and how to avoid losing trades.

Before entering a trade, you need to determine 3 things.

1. Entry trigger
2. Stop loss
3. Target

1. Entry trigger = Reasons for entering a trade. There could be multiple reasons or a single reason for entry.

Generally a set of reasons AKA confluence is a higher probability trade and a generally a safer entry.

Example of an entry trigger.


2. Stop Loss.

The price in the opposite direction of the trade where the trade is exited, at a loss.

At this level, the reason for the entry becomes invalidated according to TA and the price can then move in the opposite direction, probabilistically.


3. Target is the possible price level that the asset might touch based on previous trends or confluence AND where a possible reversal could occur.

Target is the next path of least resistance from where the price might reverse.

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Act of 1871
This is Long but it will end with a BOOM

With no constitutional authority to do so, Congress created a separate form of government for the District of Columbia, a ten-mile square parcel of land (see, Acts of the Forty-first Congress,”

Section 34, Session III, chapters 61 and 62).
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and neck of America.
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foot in the door of the United States.
The Act of 1871 formed a corporation called THE UNITED STATES. The corporation, OWNED by foreign interests, moved in and shoved the original Constitution into a dustbin.

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10 simple questions that CHANGED my life

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Here they are:

Q: Can you really control that?

Smart people know what they can and cannot control

If you're living in the past, you're nostalgic
If you're living in the future, you're anxious
If you're living in the present, you're at peace

Q: Did you start today with a victory?

Starting every day with a victory sets you up to win

I don't care what it is:

- Make your bed
- Make a wonderful coffee
- Hug your wife or children

No such thing as a small win. It's a win!

You'll win more, if you start winning early

Q: What are you optimizing for?

#MFSA
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2. Freedom
3. Stability
4. Ability

The world rewards those who are focused

Perfectly prioritize

Are you being optimistic?

Guaranteed: more luck when you're optimistic
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